The Answer is YES
HEALTHCARE REAL ESTATE
But research the options and opportunities available By JERRY HALSEY, JR. CCIM, CRB, SIOR
I’ve been doing commercial real estate for a while. Longer than I care to admit some days, seeing as how I got my license right out of high school and last year, I celebrated the BIG 50! But, if it’s true that with age comes experience, and with experience comes wisdom, then it’s my hope that what I’m about to share will be of some value to you. Over the course of my career, I have been privileged to work with several professionals in the medical field. Some as clients, some as partners. Whatever the relationship, I have had the occasion to represent and work with many of them as they pondered what role real estate played in their business model. The questions covered the entire spectrum of possibilities. “Should I own my own building? If so, should I have more space than I need to rent out to someone else? Should I lease space for my office? Should I treat real estate for my practice as an investment? Or should I treat it as an expense?” In case you haven’t guessed from the title of the article, that answer to each of these questions is a resounding yes! Allow me to reiterate. You can actually answer yes to each of the aforementioned questions, and the results are not mutually exclusive. In fact, if you follow the counsel I am asking you to consider, you will employ each strategy to your ultimate benefit. How can you do that? I am so glad you asked! I have found that the best way to reap the maximum benefit, with the least amount of risk, is to personally become a member of a partnership entity that would own the real estate, and then your practice would become a tenant. This scenario offers a multitude of benefits. First of all, it allows you to spread the risk of commercial real estate with a group of investors; some of whom I would suggest could also be tenant users. At least one of the partners should be a developer or real estate professional. That way, someone with the time, expertise and resources to help market and manage the building is a part of the ownership. It frees everyone up to practice the profession they are trained to do, and takes the burden of managing real estate off you. Secondly, it gives you the ability to expense your rent for your practice. You will need to consult your tax professional for the specific benefits as it pertains directly to your situation. Thirdly, in the event that you eventually retire, it allows other existing tenants to expand into your space (if they need it at the time), or it gives your partner/ property manager the time to market your space and back fill it with a new tenant. Either way, your personal investment in the real estate remains a part of your portfolio. If you decide you no longer want arkansasmedicalnews
to own, you have other partners to whom you could turn to for an opportunity to buy your interest in the building. The actual structure of the partnership is something else that you should discuss with your tax professional as well as your real estate adviser. Two of the most common for this type of investment is a Limited Liability Company (LLC) and a Tenant In Common (TIC). While there are multiple differences, one of the
primary differences deals with how you manage the tax consequences and what options you have, as either individuals or a group, should you choose to sell the real estate at some point. I respect the fact that investing in commercial real estate is a major undertaking, and I am not trying to trivialize all the factors that go into such an important transaction. But I do think, in many cases, busy medical professionals miss some in-
credible investment opportunities because they find it difficult to find the time to properly research the various options and opportunities available. If you have a commercial broker in your market that you already have a relationship with and that you trust, I highly recommend that you give them a call and schedule some time to visit. If they have a CCIM designation, all the better. If you are (CONTINUED ON PAGE 11)
BETTER Welcome Jerri S. Fant, MD, FACS Breast Surgeon
CARTI is excited to welcome noted breast surgeon Jerri S. Fant, MD, FACS to its staff. After earning her medical degree from the University of Arkansas for Medical Sciences, Dr. Fant completed a fellowship in breast surgical oncology at Baylor University Medical Center in Dallas. She has been in practice for more than 15 years, earning an unmatched reputation as a strong advocate for breast cancer patients and their families. Her passion and dedication make her the perfect fit for CARTI as we continue to meet the growing needs of Arkansas patients.
FOR PATIENT REFERRALS: Phone: 501.955.9466 | Fax: 501.955.0399
CANCER FOCUSED. PATIENT CENTERED.
Arkansas Medical News March-April 2019